In short: a Hong Kong company pays Profits Tax only on profits sourced in Hong Kong. Rates are two-tier: 8.25% on the first HK$2 million of profit and 16.5% on the rest. Hong Kong has no VAT and no tax on dividends.
How taxation works
- Territorial principle. Profits from business carried on in Hong Kong are taxed. Profits sourced outside Hong Kong may be exempt.
- Offshore claim. To have profits treated as offshore, the company makes a claim to the Inland Revenue Department (IRD) and supports it with documents.
- Two-tier rates. The lower rate on the first slice of profit applies to only one company in a group of connected entities.
- No VAT. Hong Kong charges no VAT or GST and no dividend tax.
How we help
- Review. We look at where the business is carried on and whether profits may be offshore.
- Documents. We explain which contracts, invoices and correspondence support the company's position.
- Return. Together with accounting and audit we prepare the Profits Tax return.
- Support. We help you respond to IRD enquiries.
What we need from you
- A description of operations: where clients and suppliers are, who negotiates and from where.
- Contracts, invoices and bank statements.
- Information about connected companies.
Price
Hong Kong tax services — on request. The price depends on transaction volume and whether an offshore claim is made.
FAQ
Is it true that Hong Kong companies pay no tax?
No. Profits sourced in Hong Kong are taxed. Only offshore profits can be exempt, and that has to be proven.
Does an offshore claim remove reporting obligations?
No. The company still has an audit and files a tax return.
Do I also pay tax in my home country?
That depends on your tax residence and how you take money out of the company. We recommend speaking to a tax adviser in your country.